Innovation that matters to you

IP strategy is now a defensive necessity

Last year was a good year for innovators. Global patent applications were up – they have now grown every year since 2003 with the exception of the slowdown of 2009 in the midst of the Financial Crisis.

Philips was the world’s largest patent applicant for patents filed at the European Patent Office (EPO) in 2015, filing 2,402 patent applications. Europe is now a leading hub for innovators from all over the world, and a vibrant technology market. Overall, applications increased by 4% in 2015 compared to 2014.

We hold 76,000 patent rights, 91,000 design rights, 5,000 domain names and 47,000 trademarks, a reflection of our strong, worldwide R&D strategy, while at the same time, we always focus on protecting our IP in a smart way by stressing patent quality.

An IP game changer

For several decades, the member states of the European Union (EU) have been negotiating the creation of a European patent with unitary effect, referred to as unitary patent, and a unified European patent court. There are many advantages of having a unitary patent system, including potential substantial cost savings for companies. The European unitary patent will soon guarantee patent protection for inventions in 26 countries across Europe, an attractive proposition. A unified court will also mean companies won’t have to weather costly litigation proceedings in multiple countries.

But much remains to be seen about how the reforms will be implemented and adopted: they still require broad adoption by required member EU countries and companies within Europe. So we watch this space with anticipation.

My advice for an operating company is to arm yourself with a robust and comprehensive IP strategy, one which is very closely aligned with your overall company strategy. Where I see companies falling short is that their IP strategy is decoupled from the broader corporate strategy teams and individual business unit strategies. This leads to an IP strategy that is highly ineffective since it will not adequately address short and long term company products/services roadmaps.

Additional scrutiny

In IP terms, the stakes really couldn’t be higher. One issue that is so controversial at the moment is that concerning SEPs (Standard Essential Patents). The FRAND assumption – fair reasonable and non-discriminatory – has become heavily contested: what is fair, reasonable and non-discriminatory to one person, or in one context, may be unfair, unreasonable and discriminatory to others, or viewed in a different context.

This means that the exact conditions under which a license will be FRAND compliant are not a universally accepted norm. The proposed Unitary Patent Court will have to deal with this and other controversial issues such as patent validity challenges and uncertainty. Issued patents which you thought were valid and secure are now constantly being challenged in court due to validity. Will the strong issued patents you thought you had hold up in court?

The emphasis undoubtedly falls on the quality of claims. Philips has always stressed the importance of patent quality over quantity. Ultimately, the patents that will survive will be the ones with high quality claims. In addition, as Philips embraces the world of digital innovations in its products and services, we see increased emphasis on securing an integrated intellectual asset management approach whereby securing quality patents is essential, but it is also imperative to secure strong intellectual property in the areas of trade secrets, design rights, knowhow, copyright and trademark protection as well. This is an essential element of IP strategy that any operating company will also need to embrace as it engages in providing digital products and solutions.

Brian Hinman

Chief IP Officer, Royal Philips

Brian Hinman is Chief Intellectual Property Officer of Philips, where he leads a worldwide team in conducting Intellectual Property management, strategy, litigation, standards, patent portfolio management and IP monetization. Brian previously co-founded Unified Patents Inc., served as Vice President of IP and Licensing at InterDigital and also VP of IP and Licensing at Verizon. Brian was also the founding CEO of Allied Security Trust (AST), Vice President of IP and Licensing at IBM and Director of Licensing at Westinghouse.